Though their revenue streams are generated in different ways, there are many similarities between for-profit and not-for-profit organizations. Each of these types of organizations are faced with challenges that can become catastrophic in nature if they are not handled properly. This paper will identify the make up of a for-profit and not-for-profit organization and compare how public relations can help contain problems as well as future disasters. McDonald’s, the long-time leader in the fast-food, faced a crossroads in the early 1990s. Domestically, sales and revenues were flattening as competitors encroached on its domain. In addition to its traditional rivals—Burger King, Wendy’s, and Taco Bell—the firm encountered new challenges. Sonic and Rally’s competed using a back-to-basics approach of quickly serving up burgers, just burgers, for time-pressed consumers. On the higher end, Olive Garden and Chili’s had become potent competitors in the quick service field, taking dollars away from McDonald’s, which was firmly entrenched in the fast-food arena and hadn’t done anything with its dinner menus to accommodate families looking for a more upscale dining experience. While these competitive wars were being fought, McDonald’s was gathering flak from environmentalists who decried all the litter and solid waste its restaurants generated each day. To counter some of the criticism, McDonald’s partnered with the Environmental Defense Fund (EDF) to explore new ways to make its operations more friendly to the environment. McDonald’s roots go back to the early 1940s when two brothers opened a burger restaurant that relied on standardized preparation to maintain quality—the Speedee Service System. So impressed was Ray Kroc with the brothers’ approach that he became their national franchise agent, relying on the company’s proven operating system to maintain quality and consistency. Over the next few decades, McDonald’s used controlled experimentation to maintain the McDonald’s experience, all the while expanding the menu to appeal to a broader range of consumers. For example, in June 1976, McDonald’s introduced a breakfast menu as a way to more fully utilize the physical plant. In 1980, the company rolled out Chicken McNuggets. Despite these innovations, McDonald’s tremendous growth could only continue for so long. Its average annual return on equity was 25.2% between 1965 and 1991. But the company found its sales per unit slowing between 1990 and 1991. In addition, McDonald’s share of the quick service market fell from 18.7% in 1985 to 16.6% in 1991. Plus growth in the quick service market was projected to only keep pace with inflation in the 1990s. McDonald’s faced heightening competition on several fronts. First, its traditional rivals—Burger King, Wendy’s, and Taco Bell—were eating into its margins through promotions and value pricing strategies. Taking a leaf from McDonald’s own playbook, Sonic and Rally’s were using a very limited menu approach to attract time-strapped consumers. Finally, Chili’s and Olive Garden were appealing to diners looking for something a little more enticing that the familiar Golden Arches for their families. In the late 1980s, McDonald’s began recognizing the importance of maintaining an ecologically correct posture with the public, which was becoming more concerned about the environment. For example, in 1989, 53% of respondents in one survey revealed that they had not bought a product because they didn’t know what effect the packaging would have on the environment. Closer to home, a 1990 study showed that each McDonald’s generated 238 pounds of on-premise solid waste per day. It’s no surprise, then, that McDonald’s sought a way to reduce its solid waste while providing a more environmentally acceptable face to the public. Beginning in 1989, it partnered with the Environmental Defense Fund, a leading organization devoted to protecting the environment, to seek ways to ease the company’s environmental burden on the landscape. Together, EDF and McDonald’s considered its impact on a wide range of stakeholders—customers, suppliers, franchisees, and the environment. The company gave its franchisees much autonomy in finding ways to eliminate environmental blight. The company’s hope was that from these divergent approaches, it stood a greater chance of finding solutions with broad applicability than if it had tried to pursue a one-size-fits-all approach from the outset. The secret of McDonald’s success is its willingness to innovate, even while striving to achieve consistency in the operation of its many outlets. For example, its breakfast menu, salads, Chicken McNuggets, and the McLean Deluxe sandwich were all examples of how the company tried to appeal to a wider range of consumers. The company has also made convenience its watchword, not only through how fast it serves customers, but also in the location of its outlets. Freestanding restaurants are positioned so that you are never more than a few minutes away by foot in the city or by car in the suburbs. Plus McDonald’s is tucking restaurants into schools, stores, and more. The key threats to McDonald’s domestically are the lack of growth opportunities. The market is well saturated, and it would difficult to achieve double-digit growth. Other concerns are a newfound emphasis on healthier eating. Most of McDonald’s most popular fare probably in some small way contributes to the increasing incidence of cancer, heart disease, and diabetes among the population. But I feel the key threat to McDonald’s continued success is its very ubiquity. Because McDonald’s are everywhere, the dining experience is never special. And as Baby Boomers age and become more affluent, it is likely that they will leave behind their fast-food ways, if only to step up to moderately priced restaurants like Olive Garden, Bennigans, and Pizzeria Uno. These chains have the added advantage of serving higher-margin alcoholic drinks. McDonald’s, meanwhile, has to continually battle Burger King and Wendy’s, which leads to an erosion of margins for everyone. Even alliances with toy manufacturers, while popular with consumers, do little for the bottom line because the cost to run these promotions can be quite expensive. The announcement from Burger King that it would begin offering table service is not much of a threat at all. You can try to dress up fast food, but it’s still fast food. I couldn’t imagine this being a potent draw for consumers. McDonald’s best course is to ignore this development as irrelevant. As the market leader, McDonald’s does not need to respond to every competitor’s initiative. Indeed, doing so would have the effect of making McDonald’s look reactive and less like a leader. The advantage of not responding to Burger King’s initiative is that the company can preserve its resources for other marketing thrusts that may provide a bigger payoff. The disadvantage of not responding to Burger King’s initiative is that you allow the firm to establish itself in a unique way in the minds of consumers—that of a fast-food restaurant that provides sit-down service. But again, is this inherent contradiction of fast-food fare and upscale dining experience likely to resonate with consumers? I would say no. If Burger King’s initiative does prove popular with consumers—as evidenced by expanding sales and market share—McDonald’s would be forced into catch-up mode. But I think that this is a risk that the company should be willing to take. McDonald’s had done well with a fairly limited product range. But falling per unit sales is a danger sign for the firm. With competitors gaining ground on McDonald’s, it may indicate a need to refresh its product line. Perhaps the best way to do that is by rotating in a couple highly promoted new menu items. This would have the effect of enlivening the product menu, without the need to go head to head with competitors on price. This slackening of per unit sales might also indicate that McDonald’s critical success factors have changed. Perhaps in the new environment, fast, convenient service is no longer enough to distinguish the firm. At this time, a new critical success factor may be emerging: the need to create a rich, satisfying experience for dinner consumers. To maintain consistency in new products as it expands the product line, McDonald’s must rely on test marketing new menu items in pilot locations. This approach will let the firm identify which items are likely to prove popular with consumers while ensuring that the company can deliver new products with consistent quality nationwide. McDonald’s already has a history of doing this so it will not require major changes to its operations strategy—at least initially. If the product line-up gets too large, then the task of maintaining quality becomes exponentially harder. The trick is to consider how to eliminate some of the existing menu items when you introduce new ones, while making sure the staff is fully trained in how to execute these products successfully. Because McDonald’s has pretty well saturated the U.S. market, it’s only real opportunities for growth lie abroad, where the competition is not so cutthroat or by introducing new restaurant concepts under brands other than McDonald’s. After all, McDonald’s is known for fast food. It’s not really a pleasant dining experience, just a cheap and convenient one. I feel that McDonald’s has reached the point of diminishing returns with the McDonald’s brand and now needs to roll out new types of restaurants. Indeed, McDonald’s has the opportunity to apply its core competencies—scrupulous adherence to quality standards and continual promotion of experimentation—in new venues. Imagine, if you will, McDonald’s opening a new casual dining restaurant under the name of Splendor. It could then franchise that concept nationwide and get some of the dollars from consumers who have grown past fast food. But its fastidious approach to operations would ensure that consumers everywhere would experience the same dining experience—a tremendous advantage for consumers who don’t want to be surprised with a bad meal. McDonald’s could try a number of concepts simultaneous in different parts of the country. Those that seemed promising could be rolled out further. The duds could be left to die quickly. While this will be an expensive undertaking, it holds the potential to unleash new areas of growth in a maturing market. McDonald’s faces some difficult challenges. Key to its future success will be maintaining its core strengths—an unwavering focus on quality and consistency—while carefully experimenting with new options. These innovative initiatives could include launching higher-end restaurants under new brands that wouldn’t be saddled with McDonald’s fast-food image. The company could also look into expanding more aggressively abroad where the prospects for significant growth are greater. The company’s environment efforts, while important, should not overshadow its marketing initiatives, which are what the company is all about. The Make-A-Wish Foundation serves as a program which “grants wishes” to children between the ages of 2-17 years of age. The children involved in the foundation usually have some type of life-threatening medical condition. This charitable organization is headed by President and CEO, David Williams. The mission statement is: “To grant the wishes of children with life-threatening medical conditions and enrich the human experience with hope, strength and joy.” The organization receives its funding from individual donors, corporations, and other organizations. The very first Make-A-Wish child was Christopher Greicius, who dreamed of becoming a police officer. Make-A-Wish made Christopher’s dreams come true by allowing him to visit a police station and be named honorable captain for a day. As with any non profit organization, the Make-A-Wish Foundation is always faced with the obstacle of generating revenue through charitable donations in a down economy. Even if the donations are made, the organization also has to rely on several volunteers in order to allow the organization to run as efficiently as possible. In mid-2008, Make a Wish Foundation found itself in an unusual situation: fundraising efforts had been so successful that its wish granting team was challenged to keep up. The organization’s territory had grown exponentially through chapter mergers over the past decade, and with this expansion came a surge in wish requests and complexity. The Make a Wish Foundation staff worked harder and longer, but the wish backlog continued to grow, causing frustration.

Though the success of the fundraising efforts is something that the Make a Wish Foundation organization does not take for granted, it became increasingly difficult for the organization to keep up with the wishes that were coming in. This posed a problem for the organization due to the fact that many of the employees are actually volunteers. It is challenging for volunteers to donate extra time to a charitable cause, because many volunteers have full time careers which take precedence over charity. Because of this, the Make a Wish Foundation decided to continue granting the increased amount of wishes they received, and offered many of their dedicated volunteers full time jobs within the organization. This provided a solution to the lack of personnel needed in order for the organization to maximize its potential outreach to the children in need.

It is clear to see that the not for profit sector is just as chaotic as the for profit sector. Many of the challenges that each organization faces can be extremely different in nature, but still challenging nonetheless. As long as these organizations are led by public relations professionals who are able to identify current issues, then each organization will be able to learn from their mistakes and prevent future disasters or negative media from reoccurring.

References

Manuel, Mendonca (2006). Ethical Leadership. Buckingham, GBR: Open University Press.

Cameron, G. T., Wilcox, D. L., Reber, B. H., & Shin, J. (2008). Public relations today: Managing competition and conflict. Boston, MA: Pearson Education, Inc.

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